PROJECT REPORT:

A STUDY ON CSR PRACTICES

IN
HINDUSTAN UNILEVER LIMITED
Corporate social responsibility
Corporate social responsibility (CSR) is a form of international private business self-
regulation which aims to contribute to societal goals of a philanthropic, activist, or charitable
nature by engaging in or supporting volunteering or ethically-oriented practices.While once it
was possible to describe CSR as an internal organisational policy or a corporate ethic
strategy,that time has passed as various national and international laws have been
developed and various organisations have used their authority to push it beyond individual or
even industry-wide initiatives. While it has been considered a form of corporate self-
regulation for some time, over the last decade or so it has moved considerably from
voluntary decisions at the level of individual organizations to mandatory schemes at regional,
national, and international levels.

■ Corporate social responsibility has been defined by Sheehy as “international private

business self-regulation.”Sheehy examined a range of different disciplinary
approaches to defining CSR. The definitions reviewed included the economic
definition of “sacrificing profits,” a management definition of “beyond compliance”,
institutionalist views of CSR as a “socio-political movement” and the law’s focus on
directors’ duties. Further, Sheehy considered Archie B. Carroll’s description of CSR
as a pyramid of responsibilities, namely, economic, legal, ethical, and philanthropic
reresponsibilitie.While Carroll was not defining CSR, but simply arguing for the
classification of activities, Sheehy developed a definition differently following the
philosophy of science—the branch of philosophy used for defining phenomena.

Terminology
It is also called corporate sustainability, sustainable business, corporate conscience,
corporate citizenship, conscious capitalism, or responsible business.

Scope
Initially, CSR emphasized the official behaviour of individual firms. Later, it expanded to
include supplier behaviour and the uses to which products were put, and how they were
disposed of after they lost value.
■ Supply chain
In the 21st century, corporate social responsibility in the supply chain has attracted attention
from businesses and stakeholders. A corporations’ supply chain is the process by which
several organizations including suppliers, customers, and logistics providers work together to
provide a value package of products and services to the end-user, who is the customer.

Corporate social initiatives

■ Corporate social responsibility includes six types of corporate social initiatives:
Corporate philanthropy: company donations to charity, including cash, goods, and
services, sometimes via a corporate foundation
Community volunteering: company-organized volunteer activities, sometimes while
an employee receives pay for pro-bono work on behalf of a non-profit organization
Socially-responsible business practices: ethically produced products that appeal to a
customer segment
Cause promotions and activism: company-funded advocacy campaigns
Cause-related marketing: donations to charity based on product sales
Corporate social marketing: company-funded behavior-change campaigns

Corporate Social Responsibility (CSR) at Hindustan Uniliver Ltd.

Abstract: Corporate Social responsibility (CSR) refers to the business man’s decisions and
actions taken for reasons at least partially beyond the firm’s direct economic or technical
interest. CSR of business is understood from two different angles of business obligations,
i.e., Socio-economic obligation, and Socio-human obligation.CSR is the sense of obligation
on the part of the companies to build certain social criteria and manage the business
activities by taking strategic decisions. Socially responsible companies should consider
various issues, from the organization of the firm to build relationship with the community. The
CSR is towards the customers, employees, intermediaries like Banks & Financial
Institutions, shareholders, society and Government. CSR is not merely a charity, but much
beyond that and is a tool to contribute directly or indirectly to the company’s bottom line and
also ensures its long term sustainability. This CSR case study of Hindustan Uniliver Ltd
(HUL) is based on the analysis of the parameters like the company history, vision, principles,
industry, products, financial data, CSR activities, CSR Methodology and Rating Criteria,
rating given to the company and justification thereof.

History/Background of HUL
HUL is an Indian consumer goods company based in Mumbai, Maharashtra. It is owned by
Anglo-Dutch Company Unilever which owns a 67% controlling share in HUL. HUL’s products
include foods, beverages, cleaning agents and personal care products. HUL was established
in 1933 as Lever Brothers India Limited and, in 1956, became known as Hindustan Lever
Limited, as a result of a merger between Lever Brothers, Hindustan Vanaspati Mfg. Co. Ltd.
And United Traders Ltd. It is headquartered in Mumbai, India and employs over 16,500
workers, also indirectly helping to facilitate the employment of over 65,000 people. The
company was renamed in June 2007 as “Hindustan Unilever Limited”. HUL’s distribution
covers over 2 million retail outlets across India directly and its products are available in over
6.4 million outlets in the country. As per Nielsen market research data, two out of three
Indians use HUL products. HUL is India’s largest Fast Moving Consumer Goods (FMCG)
Company with a heritage of over 80years in India. With over 35 brands spanning 20 distinct
categories such as soaps, detergents, shampoos, skin care,toothpastes, deodorants,
cosmetics, tea, coffee, packaged foods, ice cream, and water purifiers, HUL is a part of the
everyday life of millions of consumers across India. HUL is a subsidiary of Unilever, one of
the world’s leading suppliers of fast moving consumer goods with strong local roots in more
than 100 countries across the globe with annual sales of €51 billion in 2012.

Vision
The four pillars of HUL’s vision sets out the long-term direction for the company—where it
wants to go and how it is going to get there:
■ Work to create a better future every day.
■ Help people feel good, look good and get more out of life with brands and services
that are good for them and good for others.
Inspire people to take small everyday actions that can add up to a big difference for
the world.
Develop new ways of doing business with the aim of doubling the size of company
while reducing environmental impact. Believing in the power of brands to improve the
quality of people’s lives and in doing the right thing.

Mission
HUL’s mission is to add vitality to life. HUL meets every day needs for nutrition, hygiene, and
personal cares with brands that help people feel good, look good and get more out of life.\

Purpose and Principles

■ Conducting operations with integrity and with respect for the many people,
organizations and environments. The business will always be at the heart of the
corporate responsibility.
Aims to make a positive impact in many ways: through brands, commercial
operations and relationships, through voluntary contributions, and through the
various other ways in which they engage with society.
Committed to continuously improving the way to manage environmental impacts and
working towards longer-term goal of developing a sustainable business.
■ The corporate purpose sets out aspirations in running business. It’s underpinned by
code of business Principles, which describes the operational standards that everyone
at Unilever follows, wherever they are in the world. The code also supports approach
to governance and corporate responsibility.

Industry & Products

■ HUL is India’s largest FMCG Company, touching the lives of two out of three Indians
with over 20 distinct categories in home & personal care products and food &
beverages. The Indian FMCG sector is the fourth largest in the economy and has a
market size of US$13.1 billion. Well-established distribution networks, as well as
intense competition between the organized and unorganized segments are the
characteristics of this sector. FMCG in India has a strong and competitive MNC
presence across the entire value chain.Hindustan Unilever Products are divided into
four categories: (1) Personal Care Products; (2) Home care products; (3) Food and
Drinks; and (4) Water Purifiers. According to the study conducted by AC Nielsen,
MNCs, and the balance by Indian companies own 62 of the top 100 brands. Fifteen
companies own these 62 brands, and HUL owns 27 of these. A glimpse of some of
the products of HUL is given in the following picture
Financial Performance of HUL
We can evaluate the financial strengths and weaknesses of HUL by establishing key
relationships between various elements of Balance sheet and profit and loss account as
under

■ We observe from the above that DPS and EPS have firstly declined and then
increased substantially which raise a red flag for this company to be attractive
investment avenue as numbers are not stable. In case of HUL, Return on Net Worth
has decreased and then increased which is positive sign that company is trying to
meet its objective of shareholders’ wealth maximization but the trend raise a doubt on
considering as an investment alternative. Same trend is observed for Return on
Capital Employed. The liquidity position as indicated by Current Ratio is also not up
 to the mark. A current Ratio of 2:1 is considered to be ideal but in case of HUL, it is
less than 1.Management Efficiency Ratios also show the same trend as that of
Investment valuation ratios and Profitability ratios, which decline followed by rise.
This is a good indication that management is trying its best to regain its efficiency but
results are not up to the mark. There is still a road ahead for the company to improve
its financial performance.

7. Rating Methodology
■ The rating methodology followed is in line with Karmayog’s CSR Ratings. It considers
the overall products and processes of HUL. CSR initiatives for the company being
followed by HUL currently are taken. Company is rated from Level 0 to Level 5
(Highest Rating). The rating focuses on 3 criteria:
■ (1) Sufficient Criteria
■ (2) Necessary Criteria
■ (3) Negative Criteria

8. Actual Rating & Justification for HUL

CSR Activities of HUL
■ Industry Sector: FMCG and Consumer Durables. Products/Services: Food brands;
Homecare Brands; Personal Brands; and Water Purifier Brand CSR Activities:
Trust/Foundation of CSR—Hindustan Uniliver Vitality Foundation CSR Areas: (1)
Community Welfare; (2) Disaster Relief; (3) Education; (4) Employee Welfare; (5)
Environment; (6) Healthcare; (7) Poverty Eradication; (8) Rural Development; and (9)
Vocational Training.
■ Some of the Major CSR Activities of HUL Are As Follows (1) Greening Barrens
(Water Conservation & Harvesting): It has 2 main objectives:
(a) To reduce water consumption in its own operations and generate sub-soil water
tables at its own sites through the principles of 5R—Reduce, Reuse, Recycle,
Recover & Renew.
(b) Help adjacent villages to implement appropriate models of watershed
development.
■ (2) Shakti—Changing Lives in Rural India: Shakti is HUL’s rural initiative, which
targets small villages with population of less than 2000. It seeks to empower under
privileged rural women by providing income-generating opportunities, health &
hygiene education through Shakti Vani program and creating access to relevant
information through the Shakti Community Portal.
■ (3) Health & Hygiene Education: Lifebuoy Swastya Chetna is a rural health and
hygiene initiative, started in 2002, and was initiated in media dark villages in UP, MP.
Bihar, WB, Maharashtra and Orissa States for spreading awareness about washing
hands with Lifebuoy soap.
■ (4) Economic Empowerment of Women: The Fair & Lovely Foundation is HUL’s
initiative which aims at economic empowerment of women across India. It aims to
achieve this through providing information, resources, inputs and support in the areas
of education, career and enterprise.
■ (5) Special Education & Rehabilitation: Under the Happy Home initiative, HUL
supports special education and rehabilitation of children with challenges.
(a) Asha Daan: Initiated in 1976, HUL supported Mother Teresa and Missionaries in
Charity to set up a home in Mumbai for abandoned, challenged children and the
destitutes.
(b) Ankur: In 1993, HUL’s Doom Dooma Plantation Division set up Ankur for special
education of challenged children aged between 5 and 15 years. Ankur provides
educational, vocational and recreational activities to over 35 children with range of
challenges like hearing or sight impairment, polio, cerebral palsy and several learning
difficulties.
(c) Kappagam: Encouraged by Ankur’s success, Kappagam (Shelter), the second
center for special education of challenged children, was set up in 1998 on HUL
Plantations in South India. It has 17 children. The focus is same as that of Ankur.
(d) Anbagam: This is another day care center (Center of Love), which was started in
2003 in south India plantations. It takes care of 11 children. Besides medical care
and meals, they too are being taught skills such that they can become self-reliant and
 pursue elementary studies.

CONCLUSION
In this case study, Karmayog’s rating methodology and rating criteria have been used. The
study helps us to understand the CSR process, rating methodology and effectiveness of
CSR. HUL is a socially responsible company and strives hard for the well being of people,
society, economy and environment. The study also helps us to understand how to rate CSR
activities and why CSR rating is critical.